By Muskan Arora
Over the
next twelve months, officials from the Department of Treasury and Department of
Commerce will establish a U.S. sovereign wealth fund, following the executive
order signed by second-time president Donald Trump.
The
executive orders are generally published in the Federal Register a few days
after they are signed.
In September
2024, Trump had spoken about a national sovereign wealth fund at the Economic
Club of New York, which is proposed to be funded through tariffs, to invest in
projects like manufacturing.
Additionally,
speaking to the press, Trump has also suggested purchasing TikTok through the
fund. The social media app, which has been removed from app stories as
divestment from parent company ByteDance was reported has Oracle and Microsoft
as potential buyers. Currently, the company is at least worth $40bn.
While it
remains unclear how the sovereign fund would be funded or where its
distributions would go.
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“Any missteps in its early stages could have reputational
and financial consequences that extend well beyond our borders,” said Michael
Ashley Schulman, founding partner in and CIO of multi-family office Running
Point Capital Advisors.
In other countries, sovereign wealth funds are funded
through government surpluses or specific taxes on the extraction of natural
resourced including fossil fuels.
Multiple states including $80bn Alaska Permanent Fund, which
invests the state’s oil revenues, has a sovereign wealth fund. Texas has two,
while there are 21 sovereign funds across U.S.
Biggest sovereign funds include $1.7 trillion Government Pension
Fund Global in Norway, $925bn Public Investment Fund in Saudi Arabia and $1.3
trillion China Investment Corp.
